Talking About Money: The Family Meeting

According to a survey Wells Fargo & Co. conducted in 2014, 44 percent of respondents identified personal finance as the most challenging topic to discuss, putting it ahead of politics, religion and even death. Many people find talking about money hard because they feel doing so is rude, embarrassing or frightening. And when family relationships are added to the mix, it is hardly surprising that many people are quick to push discussions about financial topics to the bottom of their to-do lists.

After all, either end of the spectrum of family dynamics can seemingly provide the perfect excuse not to talk about money. For close-knit families, it may seem as if everyone trusts one another and communicates well, so there is no need for specific discussions about finances. But it is crucial not to let good relationships create the impression that these specific, concrete conversations about a family’s finances are unnecessary. After all, even the closest families cannot read one another’s minds. Conversely, if a family struggles with internal conflict and distrust, sitting down together may be the last thing anyone wants to consider. But refusal to communicate will only exacerbate problems.

For families of either type, and for the many families that fall somewhere in between, a multigenerational family meeting may be the best way to broach the money conversation. Such a meeting can create a framework in which family members feel they are given permission to discuss topics that normally seem taboo. It can also help to prevent future feelings of resentment or accusations of unfairness, because beneficiaries are not blindsided and have an opportunity to hear the reasoning behind the choices made by their parents or grandparents. Many inheritance fights break out because families didn’t communicate prior to the death of the family member in question; while a given estate planning decision may not please everyone, it is less likely to cause explosive arguments when it doesn’t come as a surprise at an already emotional time.

A family meeting’s structure will depend on the needs and goals of a given family. If a particular issue or problem is at hand, the family may want to schedule a single meeting or a short series of meetings to address it. However, for many families, recurring meetings can prove useful for ongoing discussion and problem-solving. The family’s size and the complexity of its finances will affect how regularly it makes sense to gather for a meeting. Schedules often change over time, as marriages, divorces, and the birth of new children or grandchildren change the family’s composition.

Most often one or more members of the generation who created or currently manages the family wealth will be the ones to call the meeting, but this is certainly not always the case. If a member of another generation has particular concerns, or simply sees the need for greater communication, he or she may wish to convince family leaders that a meeting is a good idea. In those instances, it is important to be sure that the older generation is comfortable with any outside advisers or facilitators before proceeding, and that any requests to keep certain topics off-limits are respected.

Once the founding generation is on board, it is often a good idea to create a small group of two or three people from different generations to work together prior to the meeting to create an agenda. These representatives can reach out to various family members to listen to existing concerns and thoughts. They can also commit to help make sure the meeting itself stays on track, since digressions will be inevitable.

The list of invitees will somewhat depend on the agenda and the meeting’s overall topic. However, it is generally best to be as inclusive as is practical. Discuss early on whether children’s or grandchildren’s spouses will be included; excluding them may cause hurt feelings or distrust, but in some situations, including them may make some family members feel they cannot speak freely. Similarly, discuss whether younger family members should be included. Some families invite all members over 21; some families extend invites to those 18 and older. Whatever decision the planners reach, it is important to apply it fairly across the board.

Since many families are scattered geographically, it may not be possible to have every family member attend every meeting. In some families, it may be enough for one member of a generation to be a “representative,” and to communicate before and after the meeting with siblings and cousins. In other families, this arrangement will not work. Generally, however, it is best to make it as easy as possible for invitees to attend. Try to be considerate of those who must travel or who have young children. In many families, members of the founding generation will cover costs for travel and childcare to show they value the family meeting’s purpose and that they want everyone to attend if at all possible. Technical solutions, such as Skype or other web-based video conferencing, may also help by letting family members participate remotely.

Some families choose to bring in a nonfamily member to facilitate the meeting. This may be a financial planner, an attorney, a nonfamily trustee or other trusted, neutral party. A facilitator may be useful in helping to plan or moderate the meeting and can also ensure that family members stick to the agreed-upon agenda. Facilitators may also address legal or privacy concerns raised by various family members at the meeting or offer objective advice in their areas of professional expertise. It is important to remember, however, that an adviser should not completely control the meeting. It is best for family members to do the potentially hard but necessary work of sharing information and collaborating on joint decisions. It is especially important for younger generations to hear the wishes and intentions of older generations directly, rather than through an adviser.

Depending on a family’s size, the meeting may take place in someone’s home. More often, though, it is best to hold it at a neutral space, such as an adviser’s office or a hotel meeting room. Wherever the venue, it should provide privacy and be free of major distractions. For the meeting to be a success, participants should be comfortable speaking frankly about sensitive topics.

Types of Family Meetings

For any family meeting, it is essential to determine the meeting’s purpose before it begins. No one attending the meeting should be surprised by its focus or goal; ideally, everyone should have access to a proposed agenda ahead of time. For most meetings, the overall goal will be communication, rather than reaching any final or binding decision in one sitting.

It is also vital to avoid the trap of trying to cover every existing issue in a single meeting, especially a first meeting. This will only burn out attendees, and is likely to leave everyone frustrated. Instead, let the discussion organically generate follow-up points to be dealt with later, either in small groups or at subsequent meetings. Keeping notes or minutes can help with these tasks; such records may also be useful later, either as a reference for those in attendance or a record for those who were absent or members of younger generations, who may wish to look back at historical family decisions as precedent.

While some meetings will be combinations of the types described below, family meetings will generally fall into one of these broad groups.

“Big Picture” Meetings

A first family meeting will often fall into this category. This sort of meeting will cover the family’s financial situation, especially that of the founding generation, and the family’s long-
term plans. The meeting isn’t about making decisions; instead, the goal should be to achieve understanding between various family members about financial matters. Individuals can and should discuss their views of the family’s wealth, and topics may range beyond finance to cover more abstract ideas of responsibility, fairness and philanthropy. Besides a first family meeting, this sort of discussion can be useful whenever there is an important change in the family situation. These changes may be positive (such as a wedding, a new child or a major financial windfall) or negative (job loss, major financial setbacks or a death in the family). Whenever something major changes, this sort of meeting can give family members permission to talk frankly about the long-term implications, financial and otherwise.

Conversations About Inheritance

As distinguished from the lateral, collaborative conversation style above, some family meetings may be structured as a “top-down” explanation of a couple or individual’s plans for their lifetime giving and future bequests. Subsequent meetings of this type may be appropriate if a gift or estate plan is substantially changed or updated. The details shared may be as broad or as specific as the individuals involved think appropriate, but may include:

Inheritance plans for adult children

Inheritance plans for grandchildren or great-grandchildren

Philanthropic intentions

Explanation of the selection of executors and trustees

The discussion may also cover expectations and responsibilities for beneficiaries or the potential for intrafamily loans. Most often, this meeting will not be about making such estate planning decisions; instead, the goal will be to create transparency about existing plans and to anticipate potential conflicts or issues that such plans may create.

Discussing A Family Enterprise

If the family wealth includes a family business, regular meetings will be crucial for a variety of reasons. For family members who are intimately involved in the business’ day-to-day operations, it is likely that the ordinary course of business will include discussions about how the business is doing and plans for the immediate future, but family members with a more peripheral involvement may still wish to be updated on these topics regularly. Other family-centric discussions may cover: new roles for younger adult family members and their personal long-term goals; who gets a say in major decisions about the business and who holds leadership positions within the organization; the relationship of family members not directly involved in the business to its operations and profits; and, crucially, succession plans for when the current family leadership steps down.

For families without one or more family businesses, this type of meeting can still be essential if the family has a large trust, runs a foundation or uses a family office to manage its affairs. Any time a complex enterprise affects the family’s finances, it is important the family be kept up-to-date on that entity. The goal of such a meeting is to reach a consensus on fair and practical operations, goals and succession plans, so that no one is forced into a role with which they are uncomfortable or, on the other hand, needlessly left out when they wish to participate.

Meetings To Address Specific Problems

Sometimes, a particular issue will become pressing enough that the entire family needs to discuss it in a formal setting. Even if finance is involved, it is likely that the problem will involve intense emotions, so a nonfamily facilitator may be appropriate, or even necessary in some cases. These sorts of problems are also unlikely to be completely resolved in a single sitting. But the best chances of a successful resolution involve a commitment to calmly listening to different perspectives and to keeping lines of communication open. The goal of this sort of meeting is to resolve the issue, preserve family harmony and, in extreme cases, avoid litigation or unwanted publicity.

Dealing With Conflict

For some families, conquering the initial awkwardness of talking about money will be the biggest hurdle. Once the meeting itself arrives, everyone may be surprised at how smoothly things progress. But unfortunately, this will not always be true.

Conflicts within a family about money will usually center on disagreements about a few key questions. Does the money “belong” to those who built the wealth or is it a family resource to be shared, and if so, shared by whom specifically? What is the wealth best used for in the long run? What is the family’s responsibility to its individual members, and vice versa?

Members of a generation that created or significantly increased family wealth may feel they have a better perspective on what to do with the family’s assets and more experience in pursuing financial goals. Depending on how much communication has already taken place, they may well have more information than younger family members about an enterprise’s operations or the nature of the family assets. They may or may not have articulated their expectations about subjects such as the desire for their children to become self-sufficient, their philanthropic intentions, or the way they intend to fund long-term care or other lifetime expenses. Leaving such expectations unspoken, however, can lead to hurt and resentment over time.

On the other hand, members of younger generations may worry about how to plan their own financial affairs if they are not sure how much inheritance, if any, they should expect, but they may understandably feel awkward asking this question outright. Members of younger generations may also one day be asked to step into various roles within the family, such as a leader in the family business, a trustee, a holder of a power of attorney, or an executor. They will need to know where pertinent information is located and how to contact relevant professionals, such as the financial planner or attorney involved in developing an estate plan.

Younger generations may also wonder about how older generations will distribute assets if circumstances differ substantially between siblings or cousins. One sister may be a surgeon with a high salary and two children; the other may work for a nonprofit with a smaller salary and no children. Their parents might wish to leave them relatively equal inheritances, or they may adjust for income, grandchildren or some combination of factors. Whatever the older generation decides, the decision will almost certainly be easier to handle in a lifetime discussion than as a complete surprise when the will is examined after death.

Family discussions may also shed light on differing desires among younger generations. For instance, some adult children may feel a strong attachment to a family vacation home; others may not want to deal with the hassle of maintenance and would rather sell the property. Some may take a strong interest in the family business; some will not. Not all conflicts can be resolved through simple discussion, of course, but honesty and transparency make it much more likely that a compromise will be found. For siblings who don’t get along, a parent can choose to set up separate trusts or bequests to remove the need for consensus and to offer a measure of privacy. The need for such steps may not be apparent, however, if everyone avoids talking about financial topics.

Talking about money is difficult, and talking about money with family can be especially so. But the consequences of avoiding it are serious and the benefits of doing so are clear. A family meeting will provide family members a forum in which to start these conversations and, in the long run, will lead to more fully considered financial planning choices that will help maximize family wealth and harmony.